“When you are forming an outside board, you are seeking help from those who are in the giving stage. These leaders experience joy in giving back, and they feel honored to help.” –Clay Mathile, in Run Your Business, Don't Let It Run You
In this post, Aileron Founder Clay Mathile describes what to know when getting started with your board of directors.
It can take a long time to learn how to use your board effectively. It can be difficult to break the habit of making things sound better than they are, and equally difficult to learn to use your directors as confidants.
Since you’ve chosen to use a board, remember that they have nothing to win or lose by telling you the truth. After all, they are there to serve you, the business owner.
When I owned the IAMS Company, our board contributed greatly to the success of the company. For instance, I had originally planned to set up an in-house university for all our distributors.
Based on their experience with three distribution systems, our directors suggested training only those who needed it. We took their advice, and sold our company-owned distribution centers, which freed $1 million in working capital.
In another situation, our board helped rethink our business plan for a new company that called for $4 million in assets. By having our board probe alternative strategies—and thereby making me rethink my approach to the idea—we found that we needed only $2 million. The vice president of manufacturing who was working on the plan then came up with an even better strategy, and the new company was launched.
Part of the Family
If yours is a family-owned business, be sure that your spouse and children meet your board. In case of a serious illness or death, the directors should know your wishes and your family should have complete trust in their competence and integrity.
If any of your children work in the business, they should be familiar with the directors and their functions, and the directors should be kept apprised of the children’s job performance.
Your board should have the capacity to review your own job performance and those of your vice presidents, as well as salaries and bonuses for these positions. Our board reviewed the organizational charts of each division and identified key middle management, an exercise that helped us keep track of information needed to ensure the survival of the business.
Learn the Road Map for How to Create & Optimize Your Board
Learn more about the role of your board and how to measure the success of your board in Clay’s book, Run Your Business, Don't Let It Run You. Then, for business owners either considering creating a board, or those who already have a board, continue learning about how to create and elevate your board at the High Performing Boards program. If you’re willing to put the energy into a board, it can be the gift that keeps on giving.